This concise guide outlines four strategies to more easily track small business expenses and keep your financial side in order.
There are so many factors that go into the effective processes to track small business expenses, and this is one of the most difficult things facing business owners today. Without knowing exactly how much money you have coming in and out of your business, it is impossible to know with any degree of certainty whether your business is actually functioning successfully or not. So you need to track small business expenses properly!
Many small business owners are experts when it comes to the product or service they provide, but are totally lost when it comes to the financial side of things. This is incredibly dangerous because it is the things you don’t know which can really hurt a business. Fortunately, these days, there are various different tools and tips available which can make the expense process a lot easier.
4 strategies to track small business expenses
To help everyone who is struggling with the financial side of their business, here is how to track small business expenses even you are not an accounting expert!
Separate Your Business Expenses From Your Personal Ones
Many new businesses start out as just a one or two-man band, and so the founders often make the mistake of running the business through their personal bank accounts. This can cause major problems when it comes to track small business expenses because you may think you have a lot of money in the accounts but have overlooked some money that you owe in your personal life.
You should always separate your business expenses from your personal ones by setting up a business account, as this will help you to accurately track your profits and payments. These accounts often come with certain perks that personal bank accounts don’t have, such as bigger overdraft limits and free financial advice.
Likewise, obtaining a company credit has many benefits when compared to using your personal cards for business payments and purchases, such as tax rebates and better interest rates.
Use Online Expense Tracking Solutions
Many business owners, especially when they first start out, do not have the knowledge or experience with taking care of a business’s finances. This is completely normal as not everyone has financial training and it takes a few years of experience to really become comfortable with this side of a business.
Fortunately, there are now various expense tracker options available online which can take over this difficult task for you and track small business expenses with a click. From easy-to-use online trackers that enable you to make tax savings, to sophisticated software programs that will take over your whole accounting department for a monthly fee, technology has simplified the expense processes so that every business owner can feel like they have their own accountant working for them.
Consult With a Financial Expert
As noted above, many new business owners have no history of dealing with expenses other than their own personal finances. This should never discourage someone from starting a business, however, because after a few years of operations, all of this will become second-nature if you put in the time and effort to learn about this side of your business.
In the meantime, and when your business starts to grow or is in a difficult financial situation, it is always worthwhile consulting with a financial expert to help you understand more and to advise you. An experienced specialist accounting firm helping sole traders and businesses or a financial advisor will be able to look at your accounts and expense reports and immediately advise you about what you are doing well and what you need to change. This help can be invaluable, and in the long run, will end up saving you far more money than the cost of their advice.
Organize Your Payments and Invoices
One factor which can have a major impact on the health of your expenses is delayed or pending payments and invoices. This will often give you a false impression of the actual reality of your business’s finances as the balance which you see in your expense reports isn’t taking into account the money that has yet to come in or go out of your business. It is vital that your payments and invoicing are properly organized and connected to your overall accounting systems so that everything is updated automatically and you can see when payments are due as you track small business expenses.
Conclusion
Keeping track of business expenses can be very difficult, particularly if you are new to business or don’t have any previous experience with the financial aspects of it. It is so important that you take the right steps to understand and organize your expenses effectively or you can end up doing serious harm to your business.
Follow this guide and try implementing some of our suggestions to track small business expenses and it will allow you to keep track of your expenses more easily and efficiently.
